GTS Chemicals lubes division recorded significant gains in both profit and revenue in 2015, thanks to a new blending plant, an expanded domestic distribution network and a concentrated push to market its premium brand, Ogistar, the Chinese specialty chemicals firm said in its annual report last week.
GTS lubricating oils segments full-year profit was 44.4 million (U.S. $6.7 million), a spike of 52 percent from the 29 million it recorded in 2014.
Based in Liaocheng, Shandong Province, GTS pointed out that its new blending plant, which was built on land it acquired at the end of 2014, nearly tripled its output. The additional capacity, totaling around 27,000 metric tons per year, allowed the company to meet existing demand.
Capital expenditure rose to 76,535 from just under 3,000 the year before due to the construction of the plant, which affected the divisions bottom line. The gross profit margin for lubricant oil has reduced slightly due to the increased depreciation charge following the construction of the new plant, the report read.
Sales boomed to nearly 212 million – a 53 percent increase from 139 million in 2014. GTS chalked up the gain to an expansion of its distribution network and a focus on selling its premium line of automotive lubricants.
Our growth is supported by our expanding distribution network and through the support that we give to our distributors to encourage them to grow their own sales, said GTS. Its sales network – which covers 21 regions of China – grew from around 50 distributors in January 2015 to 76 by yearend.
We have decided to concentrate on marketing and developing one brand, Ogistar, which is aimed at the mid- to high-end of the market, although we continue to offer two other brands, [Changyun and Qiaoke], the report continued. By concentrating on Ogistar, we are able to differentiate it more easily from our competitors. Our sales continue to grow by gaining market share from other producers who are unable to supply oil of similar quality at competitive prices.
Ninety-seven percent of the divisions sales were to the automotive industry, and the remaining three percent went to industrial markets. The new blending plant increased its portfolio to nearly 300 products, with new product lines in both segments, such as coolants for vehicles and cutting fluids for industrial customers.
In 2014, the split was around 92 percent and 8 percent, respectively. As part of the process of increasing our market presence in the automotive sector, we have commenced production of allied products such as antifreeze and brake fluid in order to be able to offer a more complete product range. GTS noted that approximately 80 percent of automotive lube sales were to repair workshops and the remainder to petrol stations via distributors.
Average prices of its three lines were 16,700 per ton for the premium Ogistar brand; 15,500/t for its mid-range Changyun products; and 13,800/t for Qiaoke lubes, which are targeted to the lower- to mid-end of the market.
GTS noted that its lubricants division is growing at a faster rate than its main business, specialty chemicals, accounting for close to 23 percent of the companys annual revenue. Specialty chemicals – namely, ammonium sulfite, of which it is the largest producer in China, accounted for 71 percent of group sales, and its recarburizer unit made up the remaining 6 percent.
GTS is registered in the Jersey, of the Channel Islands, a dependency of the United Kingdom.